On November 5, 2015, the United States Bankruptcy Court for the Northern District of California issued a “Memorandum re Plan Confirmation” in In re Bowie, Case No. 15-10144 (Bankr. N.D. Cal. Nov.
Pursuant to Section 727 of the U.S. Bankruptcy Code, an individual Chapter 7 debtor may receive a discharge "from all debts that arose before the date of the order for relief under this chapter." A Chapter 11 or Chapter 13 debtor may receive similar relief pursuant to Sections 1141 and 1328(b), respectively. Under any chapter, this discharge serves the Bankruptcy Code's principal goal of relieving a debtor from his or her prepetition obligations and providing the debtor with a "fresh start" on emergence from bankruptcy.
Under the Uniform Commercial Code (UCC), a secured party can perfect its lien on certain of a debtor's assets by the filing of a UCC-1 financing statement. However, Section 9-509 of the UCC provides that a party may file such a financing statement only if the debtor authorizes the filing: either expressly in an authenticated record or, more commonly, by executing a security agreement. The UCC does not specify when a debtor must provide such authorization, but the U.S.
The chapter 15 cases of OAS S.A. ("OAS") and its affiliates represent the second time in less than one year that a U.S. bankruptcy court has been confronted with a serious challenge to the recognition of insolvency proceedings in Brazil by a group of U.S. creditors. The latest challenge focused on two separate lines of attack: (1) whether the "foreign representative" authorized to commence a chapter 15 case can be appointed by the company rather than the foreign insolvency court; and (2) whether Brazilian insolvency law is manifestly contrary to U.S. public policy.
Compensation for bankruptcy professionals employed in bankruptcy cases is governed by Section 330 of the Bankruptcy Code. Section 330(a)(1) of the code provides, in pertinent part, that "the court may award to ... a professional person employed under Section 327 or 1103—(A) reasonable compensation for actual, necessary services rendered." Professionals whose employment is approved by the bankruptcy court consequently must file fee applications, to be reviewed and approved by the court for work performed in the bankruptcy case.
On Jan. 21, in Official Committee of Unsecured Creditors of Motors Liquidation v. JPMorgan Chase Bank (In re Motors Liquidation), No. 13-2187, (2d Cir. Jan. 21, 2015), the U.S. Court of Appeals for the Second Circuit addressed whether a UCC-3 termination statement, which was improperly filed as part of the repayment of an unrelated loan, may be considered effective to terminate the security interest in question, even where none of the parties intended that result.
Section 303 of the Bankruptcy Code provides creditors with a mechanism to force a recalcitrant debtor into bankruptcy through the filing of an involuntary petition for relief. Pursuant to this section, an involuntary bankruptcy case may be commenced only under Chapter 7 or 11 of the Bankruptcy Code, and may only be brought against a person otherwise qualified to file a voluntary petition. Where the purported debtor has fewer than 12 creditors, the involuntary petition need only be filed by a single creditor.
In a case of first impression in Texas, the United States Bankruptcy Court for the Southern District of Texas held that the former majority member of a chapter 11 LLC debtor had to relinquish control of the LLC's Facebook page and Twitter account because they were property of the LLC's bankruptcy estate. In re CTLI, LLC, Case No. 14-33564, 2015 WL 1588085 (Bankr. S.D. Tex. April 3, 2015). CTLI, LLC was a Texas gun store and shooting range doing business as Tactical Firearms.
Non-U.S. companies in the process of restructuring debt that includes one or more series of U.S. bonds must ensure that their restructuring plan and any securities issued as part of such plan comply with the requirements of U.S. securities law, in particular the registration requirements of the U.S. Securities Act of 1933 ("Securities Act").
In an effort to protect the property of a bankruptcy estate, Section 362(a) of the U.S. Bankruptcy Code imposes an automatic stay on most proceedings against a debtor in bankruptcy. The policy of this section is to grant relief to a debtor from creditors, and to prevent a "disorganized" dissipation of the debtor's assets. (See, e.g., U.S. Securities and Exchange Commission v. Brennan, 230 F.3d 65, 70 (2d Cir. 2000).) However, the scope of the automatic stay is not all-encompassing.